Understanding Soft and Hard Credit Checks

What is a soft credit check?

A soft credit check, also called a soft search or quotation search, allows a lender or other organisation to review limited information from your credit file without recording a formal application search. It is commonly used to provide an eligibility assessment or indicative offer. Checking your own credit report is also normally a soft search. Soft searches do not affect your credit score and are not visible to other lenders, although you may see them on your own credit report.

For example, Updraft may use a soft search to show whether a person is likely to meet its lending criteria before they submit a full application. The result is not a guarantee of approval. A lender may still need to verify identity, income, spending and other affordability information.

What is a hard credit check?

A hard credit check, or hard search, is recorded when a person formally applies for credit and gives permission for the lender to assess the application. The lender usually reviews information such as existing borrowing, payment history, credit limits, recent applications and public records held by a credit reference agency.

Hard searches are visible to other lenders and remain on a credit report for a period set by the relevant credit reference agency. A single hard search is not normally significant, but several applications in a short period can suggest that a person is seeking substantial new credit. This may affect how some lenders assess a subsequent application.

When is each type used?

Soft searches are generally used for comparisons, eligibility checks and credit-monitoring services. Hard searches are generally used when a person proceeds with a full application. The exact process varies by provider, so the application wording should be checked before consent is given.

A credit check is only one part of a lending decision. Lenders may also assess affordability, including income, regular commitments and existing debt. A soft search can indicate potential eligibility, but only a full assessment can determine whether an application meets the lender’s criteria and what terms are available.